Malaysia’s supermarkets and hypermarkets on a consolidation stage.

PETALING JAYA: According to Retail Group Malaysia Managing Director Tan
Hai Hsin, supermarket and hypermarket operators in Malaysia are going through a
consolidation stage.

“They expanded aggressively throughout the country during the 2000s. With
the current economic condition that has not improved until now, it is not a
surprise for them to close under-performing stores, ” he said.

“The closure is not expected to be worsened than this year, unless a
recession occurred next year, ” Tan said, adding on whether Malaysian consumers
are turning to mini-markets instead of seeking bargains at hyper- and
supermarkets.

“Based on our observation, they
are shopping lesser in hypermarket and buying more often in mini-market, ” he
said.

The hypermarket format with 80,000 square feet and more was introduced to
Malaysians with the arrival of Carrefour in 1994, Tan said.

Since then, it became very popular among Malaysian families because it
was able to offer wide variety of good under one roof.

Tan stressed out that Malaysians enjoyed hours of shopping at leisure
pace in this super-large grocery store. For them, it’s a family outing.

“In recent years, however, we
believe Malaysian families are tired of spending hours in hypermarkets for
basic necessities.

“They are still visiting hypermarkets for large quantity of purchases,
but they are not going as often as 10 years ago.”

They are starting to shift in supermarkets and mini-markets for purchases
in small quantities.

“In addition, these small-format
grocery stores are now able to offer very competitive prices as compared to
hypermarkets. This trend has resulted in major hypermarket operators to open
new grocery stores in smaller sizes, ” said Tan.

Supermarket and hypermarket sub-sector, which reported negative growth
with closures of some stores was the worst performer for the quarter under
review, Tan said in the September 2019 Malaysia Retail Industry Report.

The report also added that this is the sub-sector’s eighth consecutive
quarter of negative growth.

So far, they’ve seen strongest growth in the two sub-sectors –
pharmacy/personal care, and specialty stores.

Report said that the department store sub-sector contracted 0.7%. It has
been facing slow growth for more than a year.
The department store sub-sector which comes with a
supermarket, saw sustainable growth. As compared with the first quarter, the fashion
and accessories sub-sector saw a slowdown to 0.4%.